2006-06-27 04:00:00 PDT Washington -- The Supreme Court agreed Monday to hear a case that will determine whether the Bush administration must regulate greenhouse gases, which could have broad consequences for California's landmark law reining in vehicle emissions to fight global warming.

The case, brought by California, 11 other states and by environmental groups, is being heralded by legal experts as one of the most important environmental issues to be heard by the high court in years. The justices' decision could touch virtually every U.S. industry, from automobile makers and oil companies to airlines and electricity producers.

"This could give us the answer to how the justices feel about one of the most important environmental issues of the future," said Robert Percival, director of the University of Maryland environmental law program. "That is particularly significant because there are other cases percolating up through the courts where states have sued electric utilities over their emissions of greenhouse gases."

The case, which is likely to be argued this fall and decided by next spring, could also put new pressure on the White House and Congress to act on climate change. A National Academy of Sciences study released last week reflects the growing consensus among scientists that the Earth is hotter today than in any period over the last four centuries and probably over the last 1,000 years.

President Bush, while campaigning for president in 2000, pledged to regulate carbon dioxide. But since taking office, he has opted for voluntarily reductions of greenhouse gas emissions by industry, an approach favored by automakers, oil companies and electric utilities.

The case began in 1999, when environmental groups petitioned the Environmental Protection Agency to regulate vehicle emissions of gases such as carbon dioxide, which are released by burning fossil fuels and trap solar heat, creating the warming effects of a greenhouse. The groups argued that the gases should be classified as air pollutants that endanger public health and must be regulated under the 1990 Clean Air Act.

In September 2003, the EPA's general counsel, Robert Fabricant, issued a memo saying the Clean Air Act does not authorize the agency to regulate carbon dioxide and other greenhouse gases.

Environmental groups sued challenging EPA's decision and were joined by California, Connecticut, Illinois, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, the territory of American Samoa, New York City and Baltimore.

In July 2005, a three-judge panel of U.S. Circuit Court of Appeals for the District of Columbia issued a confusing 2-1 decision that sided with the administration. Legal experts say separate opinions issued by the three judges reflected sharply different ideologies on the polarizing issue of climate change.

One of the judges, David Sentelle, an appointee of President Ronald Reagan, wrote that environmental groups and states lacked standing because they failed to show specific injury from climate change that affects the world as a whole. Judge Raymond Randolph, appointed by President George H.W. Bush, expressed sympathy with the administration's argument that unilateral action by the United States to limit carbon dioxide "could weaken efforts to persuade developing countries to reduce the intensity of greenhouse gases."

The dissenting judge, David Tatel, an appointee of President Bill Clinton, sided with environmental groups and the states, writing: "I have grave difficulty seeing how EPA ... could possibly fail to conclude that global warming 'may reasonably be anticipated to endanger public health or welfare.' "

Lawyers for the plaintiffs believe the lower court's decision is ripe to be overturned because the Clean Air Act requires the EPA administrator to set standards limiting any air pollutant from vehicles that could jeopardize public health or welfare. Another section of the act specifically cites impacts on climate as something that can bring about federal regulation.

The Supreme Court will have to consider two key questions: First, does the EPA have the authority under the law to limit greenhouse gases? And if it has the authority to regulate, is it obligated to do so in light of growing evidence of the effect of greenhouse gases on climate?

The case also will be a key test of the environmental leanings of the high court under Chief Justice John Roberts, which split last week in a contentious decision that pitted protection of threatened wetlands against private property rights.

The University of Maryland's Percival said conservative justices may have taken the case to address the issue of standing -- that is, whether environmental groups can claim they are injured parties so they can file suit. However, that argument could be more difficult because a dozen states have joined the case.

"Scalia has been trying for years to keep environmentalists out of the courts," Percival said. "It could be of even broader significance than just the global warming issue. It could affect environmental litigation generally."

The case also has major ramifications for California's landmark greenhouse gas emission standards, which will be phased in starting for cars and light trucks in the 2009 model year, reaching a nearly 30 percent cut in emissions by 2014. California, which has special authority to regulate air pollutants, must request a waiver from the EPA to put its new rules in effect.

"If the Supreme Court upheld EPA's position and said there is not authority (to regulate greenhouse gases), that would be bad for California's initiative," said David Doniger, senior attorney for the Natural Resources Defense Council's Climate Center. But he believes the high court is likely to at the very least amend the earlier decision.

"We are encouraged because if the court had been happy with the lower court's decision and wanted to let the administration kick the can on the issue, they could have just left the lower court decision as it was," he said.

In Sacramento, legislation that would take California beyond the regulation of tailpipe emissions and require businesses to reduce greenhouse gas emissions was approved in the Senate Environmental Quality Committee on Monday night.

The bill, backed by Assembly Speaker Fabian Núñez, D-Los Angeles, would require industries to report the amount of greenhouse gases, such as carbon dioxide, they produce and require reductions of those emissions beginning in 2012.

Business interests opposing the measure say reducing emissions will increase energy costs, slow productivity and give other states a competitive advantage over California companies.

Backers say that not combatting global warming would lead to coastal cities being deluged by rising sea levels, increased risk of flooding from snowpack loss and poorer air quality.

Gov. Arnold Schwarzenegger has not taken a position on the bill, AB32, despite calling for reductions in emissions to 1990 levels by 2020, the same time frame contained in the bill.